Business Bankruptcy Specialists
“The Corona Virus Economic Crisis is proving to be devastating to The Australian Business Economy. It is expected that as a result of this Crisis the number of businesses collapsing in Australia will surge to never before seen levels.“
“If you have been caught up in this Economic Crisis, do not despair.“
There are a number of options available to business owners and it is important that you choose the correct one for your circumstance. The process of Business Bankruptcy is complicated and difficult to navigate but we can assist you every step of the way.
You may wish to wind your business up and walk away. You may wish to salvage what you can and try and start again. You may wish to sell it off and see what you can get for it. There are so many options but if you want to obtain the best outcome, then get the right advice.
There are different types of Business Bankruptcies for different types of business structures.
Click on the link to the type of business you have below.
SOLE TRADERS or PARTNERSHIPS
If your business is a sole trader business or you are in partnership with someone else then your options are very different to those of a company.
As a sole trader you are trading as “You”. You are the business and as the business, any debts that the business has accrued have been personally guarantee by you.
If you trade in a partnership, it simply means that two sole traders have joined together and both of them are equally and personally liable for any debts accrued by the business.
What does this mean?
All the debts that your business has accrued during the time that you have been trading are your personal responsibility and you are required to pay them.
Many people believe that it is their “SoleTrading Business” that accrued the debts therefore it is this “Sole Trading Business” that is responsible for their debts. This is not the case. Your sole trading business and you personally are one and the same thing and that makes you personally responsible for your debts.
How much of a problem is this?
Good question! This is the most common question we are asked from people that run their own Sole trading business or Partnership.
Much of this depends upon the size of the debts, the terms of payment, whether they are secured and so forth. There are certainly options available to you to consider if you are in this position but of course we will need this information before we can provide you with our recommendation.
If your business is unable to continue to trade because you have no cash flow and cannot pay all of your businesses debts then you need to take some action sooner rather than later to try and salvage your personal financial position.
Click below to complete the FREE Personal Evaluation. Be sure to include all your business debts as well as your personal debts when completing this form. Once we have this information we can advise you on your best options.
As mentioned, you do have options. These include but are not limited to the following:
- Part IX Debt Agreement (not usually Recommended by us as they are often “Flogged” in the Insolvency Industry as a good option when in reality they are only good for the firm offering them, not good for the client)
- Part X Debt Agreement (A better option as this has good flexibility)
- Informal Debt Agreement (Another good option as long as you do not have too many creditors)
- Personal Bankruptcy (A good option if you have limited assets and will not be too heavily affected by Bankruptcy)
However, to determine which one is best for you complete the
Following are answers to the most common questions clients ask us about their options for Sole Trading or Partnership Businesses.
- You negotiate to pay a percentage of your combined debt that you can afford over a period of time.
- You make repayments to your debt agreement administrator, rather than individual payments to your creditors.
- After you complete the payments and the agreement ends, your creditors can’t recover the rest of the money you owe.
Debt agreements are not:
- consolidation loans or agreements to borrow money
- able to release you from all types of debts—some debts you will still need to pay.
A Part IX (9) Debt Agreement is a legally binding agreement between you and your creditors and can be a flexible way to come to an arrangement to settle debts without becoming bankrupt. NB: There is strict eligibility criteria for you to enter into a Part IX debt agreement.
A Part X is also a type of personal insolvency agreement. Like a Part IX it is a repayment schedule which is negotiated with your creditors, but a Part X lends itself to people in a more complicated debt situation.
Unlike a Part IX Debt Agreement, there is no eligibility criteria for a Part X, which makes it suitable for people with high debt amounts and people who are higher income earners. Because the process is longer and more involved, it allows debtors to propose settling their debt in a reduced lump sum and other methods.
This is an agreement that does not involve a formal Administrator or Trustee to initiate and service.
It is a process wherein a third party negotiates on your behalf with all your creditors. It is very flexible and may result in the negotiation of full or percentage payments of debts to your creditors resulting in release from all further liability.
Bankruptcy is a legal process where you’re declared unable to pay your debts. It can release you from most debts, provide relief and allow you to make a fresh start.
You can become bankrupt 2 ways. These are:
- Voluntary Bankruptcy: To do this you need to complete an in depth Bankruptcy Form application.
- Creditors Petition: When someone you owe money to (a creditor) makes you bankrupt through a court process.
COMPANIES
The process of Company Bankruptcy is Very different to the processes used for Sole Traders or Partnerships.
Whereas a sole trader is an individual running a business, a Company is a separate entity and it is the “PTY LTD” entity that trades, not the individual who is running it.
This PTY LTD structure lends itself to a completely different type of “Bankruptcy” and it can be quite complicated, so you need to get the right advice before you make any decisions about what you are going to do.
The name for Company Bankruptcy is “Liquidation” and can take a number of forms.
Company Insolvency Options
There are a number of Insolvency options available for companies. These options include the following:
Voluntary Administration
- Voluntary Administration to Restructure
- Voluntary Administration to Liquidation.
- Deed of Company Arrangement
Liquidation
- Court Appointed
- Creditors Voluntary
- Member Voluntary
Receivership
Knowing which one is right for you and the consequences of your choices is of the utmost importance, so be sure to involve us or you could make a devastating choice.
Below are the most common questions asked by our Company Insolvency Clients:
Voluntary administration is where the directors of a financially troubled company appoint an external administrator called a ‘voluntary administrator’.
A secured creditor (someone the company owes money to) with a charge over most of the company’s assets can also appoint an Administrator.
The role of the voluntary administrator is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a Deed Of Company Arrangement (DOCA), be placed into Liquidation or be restructured and returned back to the directors.
A Voluntary Administrator is usually appointed by a company’s directors, after they decide that the company is insolvent or likely to become insolvent.
When a Company goes into Voluntary Administration it may present a Deed of Company Arrangement (DOCA) to its creditors. This DOCA may then become a binding arrangement between the company and its creditors.
The DOCA outlines and governs how the company’s affairs, including such things as it’s debts and its assets will be dealt with.
The Arrangement aims to maximise the chances of the company continuing to trade, or to provide a better return for creditors than what they may get if the company is simply immediately wound up in Liquidation.
Liquidation is the orderly winding up of a company’s affairs. It involves selling the company’s assets, distributing the proceeds among creditors and then distributing any surplus to shareholders. The three types of liquidation are:
- Court Appointed.
- Creditors’ Voluntary.
- Members’ Voluntary.
A Court Appointed Liquidation results from a court order, usually initiated by a creditor of the company.
A Creditors’ voluntary liquidation is a Liquidation initiated by the company.
A Members’ Voluntary Liquidation is a Liquidation initiated by the shareholders of the company to close down a SOLVENT company. If your company is collapsing this does not apply to you.
A company most commonly goes into receivership when a receiver is appointed by a secured creditor who holds security or a charge over some or all of the company’s assets.
The receiver’s primary role is to collect and sell enough of the company’s charged assets <>to repay the debt owed to the secured creditor.
Bankruptcy is a legal process where you’re declared unable to pay your debts. It can release you from most debts, provide relief and allow you to make a fresh start.
You can become bankrupt 2 ways. These are:
- Voluntary Bankruptcy: To do this you need to complete an in depth Bankruptcy Form application.
- Creditors Petition: When someone you owe money to (a creditor) makes you bankrupt through a court process.
Good question. This is often a very difficult question to answer until you speak with someone who knows more about each of these options. It is best not to take any chances but to get advice on which one, if any, is best for you and your company.
To determine which is the best option for your circumstance, complete the Liquidation Evaluation below and we will provide you with a free analysis of your companies situation and guide you to the right choice.
This is obligation free and completely confidential.
Don’t leave this decision to luck. Making the wrong decision can have devastating consequences to you personally.
If you have more questions about your company, please visit our FAQs page